Emerson Electric profit off 23% as revenue slides

LisaBeilfuss

Emerson Electric Co. said profit in its latest quarter plunged 23% as a slowdown in global spending continue to weigh on the company's revenue.

The St. Louis company in late June said it would spin off its network-power business and that it may sell a large chunk of its industrial-automation group, potentially leaving Emerson with businesses mostly focused on equipment for controlling industrial processes and components for heating and air-conditioning systems.

The moves come as Emerson grapples with reduced customer spending, especially in the energy sector, as well as with a stronger dollar that makes its products more expensive abroad.

"The third quarter was an extension of the challenges and market headwinds that have affected our business over the past two quarters, with an increasingly negative impact on results," said Chief Executive David Farr. "We expect difficult market conditions to continue over the next three to four quarters as global spending remains under pressure from the uncertainty in oil prices and sluggish growth in capital spending across many mature and emerging markets," Mr. Farr said.

Given that little change is expected in market conditions for the remainder of the year, Emerson again slashed guidance. The company now projects $3.97 to $4.07 in per-share earnings for the business year ending in September, down from its last estimate of $4.17 to $4.32 a share. That range includes a gain of 77 cents a share stemming from its power-transmissions divestiture.

The company, which had said it would accelerate restructuring plans, said full-year restructuring is now expected to be between $160 million and $180 million.

In all for the June quarter, Emerson earned $564 million, or 84 cents a share, down from $728 million, or $1.03 a share, a year earlier.

Revenue slid 13% to $5.5 billion. Stripping out currency effects and the impacts of divestitures, sales fell 5%, the company said.

Analysts projected 83 cents in earnings per share on $5.63 billion in revenue, according to Thomson Reuters.

In its to-be-spun off network-power business, revenue fell 17%, driven by weakness in China. Sales in the process-management segment, Emerson's largest, declined 10%.

Shares in the company, down about 17% this year, were inactive premarket.

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